Alaron agrees to settlement with CFTC

(Crain's) -- Alaron Trading Corp., one of Chicago's largest futures brokers, has agreed to pay a fine after a federal oversight agency accused it of sloppy management practices.

Alaron will pay a penalty of $180,000 and restitution of nearly $120,000 to customers to settle charges brought by the U.S. Commodity Futures Trading Commission. Alaron also has agreed to shore up its supervisory guidelines and practices.

The Commodity Futures Trading Commission simultaneously announced the charges and settlement on Monday.

Alaron agreed to the settlement without admitting or denying any wrongdoing, according to the settlement agreement.

A representative from Alaron was not available to comment.

The CFTC accused Alaron of failing to keep an eye on how customer accounts were being managed from around July 2004 to February 2006. The CFTC alleged that Alaron had an unregistered commodity trading adviser managing certain accounts.

"Despite numerous indications to Alaron employees that it was permitting an unregistered (commodity trading adviser) to manage accounts, Alaron did not have adequate compliance procedures to discover, deter and/or terminate the wrongful conduct," the CFTC said in a statement.

In addition, Alaron was penalized for allowing an introducing broker to conduct unauthorized trades on customer accounts. Introducing brokers are supposed to send buy and sell orders to companies such as Alaron, not conduct the trades or manage customer accounts.